Exemption from the Payment of Donor's Tax

July 25, 1989 BIR RULING NO. 154-89 29 (h) 2 (C) 94 (a) (3) 526-88 154-89 Gentlemen : This refers to your request for exemption from the payment of donor's tax on donations made in your favor and that such donations/contributions be fully deductible under Section 29(h)(2)(c) of the National Internal Revenue Code. cdtech It is represented that the donee is a non-stock, non-profit corporation operated exclusively for the promotion of social welfare as contemplated under Section 26(g) of the National Internal Revenue Code, as amended, paying no dividends, governed by trustees who receive no compensation and devoting all its income, whether gifts, donations, subsidies or other forms of philanthropy, to the accomplishment and promotion of the purposes enumerated in its articles of incorporation. In reply, please be informed that pursuant to Section 94(a)(3) of the Tax Code, as amended, gifts in favor of an educational and/or charitable, religious, cultural or social welfare corporation or institution are exempt from the donor's tax provided not more than thirty per centum of said gifts shall be used by such donee for administration purposes. Accordingly, since the donee is a non-stock, non-profit corporation operated exclusively for the promotion of social welfare, the donation made in its favor is exempt from the payment of donor's tax, pursuant to Section 94(a)(3), as amended, provided that not more than thirty per centum (30%) of said gifts shall be used by the donee for administration purposes. As regards the deductibility of the donations or contributions, the same shall be allowed as deductions for income tax purposes to an amount not exceeding 6% in the case of an individual and 3% in the case of a corporation of the taxpayer's taxable income derived from business as computed without the benefit of this deduction (Sec. 29(h)(1), Tax Code). However, said donations or contributions can be deductible in full provided that conditions are complied with as prescribed by Section 29(h)(2)(C) of the Tax Code, as amended by Batas Pambansa Blg. 45, and as implemented by BIR-NEDA Regulations No. 1-81. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner